The House Agriculture Committee's Subcommittee on General Farm Commodities and Risk Management, chaired by Rep. Conaway (R-TX) conducted a hearing to review programs authorized by Title I of the '08 farm law and the Supplemental Revenue Assistance Payments (SURE) program.
Title I authorizes direct payments (DPs), counter-cyclical payment (CCP) programs and marketing assistance loans. The '08 farm law also initiated a new form of revenue support known as Average Crop Revenue Election (ACRE). A permanent disaster program known as SURE also was introduced in the '08 farm law.
"In the last few years American agriculture has experienced a multitude of perils, both natural and man-made," Chairman Conaway (R-TX) said. "With that in mind, and Congress lacking the ability to accurately predict the future, it is imperative that future farm policy not only mitigates a crisis, but also establishes a framework to prevent one. With little time before the next farm bill, we should be cognizant that our resources are finite, our decisions are timely, and our investments need to last. Our choices must be wise."
The primary witness was Bruce Nelson, who was recently appointed to serve as Farm Service Agency (FSA) administrator. He was accompanied by Juan Garcia, FSA's acting deputy administrator for Farm Programs who most recently served as state executive director in Texas.
There was excellent attendance by subcommittee members. As expected, members asked numerous questions about the impact of eliminating Direct Payments, about how to improve SURE and about which programs USDA representatives considered to be a top priority.
Nelson did not respond directly to the latter question but he did reveal that USDA has analysis which might guide members in future deliberations.
Garcia responded to numerous questions about the IRS review of Adjusted Gross Income (AGI) compliance. He also announced that beginning with signup for the '12 crop programs the agency will eliminate the separate document growers currently are required to send to the IRS granting the agency permission to share information with USDA. That document will be incorporated into the USDA signup process. Garcia did not respond directly to a question by the Chairman asking how many growers have been flagged by the IRS review.
Several members asked about FSA's ability to deliver programs, and Nelson advised that a number of FSA employees have accepted early retirement offered in anticipation of the agency experiencing significant budget cuts in FY12.
Garcia briefly described a project that will allow growers to file applications and supply acreage data once -- either at an FSA office or to a crop insurance agent. The information will be entered into a record which is secured and can be used by FSA and the Risk Management Agency eliminating the need for growers to provide the same data multiple times. A pilot program is scheduled to be conducted in Kansas this fall.
Rep. Scott (D-GA) stated that he is concerned by the one-size fits all approach to AGI tests. He said the financial community is going to be unwilling to lend funds to individuals with AGI's that can't service the level of debt necessary to purchase and maintain new equipment and finance operations. He specifically referenced the cost of new cotton pickers which can range from $600,000-$750,000 as an example of the financial resources required to operate a modern farming operation and concluded by saying "a $250,000 limit on AGI is simply unworkable in these times."
Funds Available to Meet Producers' Credit Needs
Agriculture Secretary Tom Vilsack announced that a high demand for guaranteed farm ownership and direct farm operating funds has prompted USDA to transfer appropriated funds between programs as authorized by law, to meet the urgent credit needs of producers, including beginning and minority farmers and ranchers.
The transfer will make an additional $100 million in loan funds available for the direct operating loan program, providing 1,600 small, beginning and minority farmers with resources to establish and maintain their family farming operations. In addition, $400 million in loan funds will be made available for the guaranteed farm ownership loan program, giving 1,000 more family farmers access to commercial lending backed by USDA. Both programs had run out of funds resulting in a backlog of approved but unfunded loan applications.
This measure will allow all of the backlogged loans to be funded and provide sufficient funds to meet the needs of new loan applicants for these programs while at the same time leaving sufficient funding for the subsidized guaranteed farm operating loans program to meet the expected demand for FY11. Producers needing additional direct operating or longer term guaranteed farm ownership loans funds are encouraged to make application at their local Farm Service Agency office.
Agricultural Trade Facilitation Act Introduced
Rep. Nunes (R-CA) introduced the Agricultural Trade Facilitation Act that would establish Sanitary and Phyto-Sanitary (SPS) negotiating objectives for the on-going Trans-Pacific Partnership (TPP) negotiations.
Rep. Nunes represents a California district that encompasses all of Tulare County and about half of Fresno County and produces agricultural products -- including upland and extra-long staple cotton -- with a farm gate or gross value of about $5 billion annually. He is a member of the Ways & Means Committee and has long been a strong advocate for improved, consistent access to international markets.
His legislation addresses several key issues: (1) an SPS regime that strengthens the requirement that the application of measures is based on scientific evidence by requiring parties to make their risk assessments available and provide a science-based justification; (2) increase regulatory coherence and use of system-based approaches and allow imports of products if the system of the exporting party meets or exceeds the end-product standards of the importer; (3) require parties to carry out risk analysis in a timely manner; ensure that risk assessments are based on the most relevant scientific data; require the parties to consider the full range of risk management options; ensure that the measures are no more trade-restrictive than necessary to meet the intended purpose; and require effective risk communication; and (4) improve testing rules; require importing parties to use validated test methods; and provide importers the right to a confirmatory test with the right to appeal.
Rep. Nunes believes the TPP provides an important opportunity to work to harmonize export certification requirements and limit information requirements on export documents to that necessary for determining whether a product meets SPS standards. Given statements that this agreement is to be the model for "21st Century" Free Trade Agreements, Rep. Nunes said, "It is imperative that we get the strongest possible SPS provisions."
Current supporters of the legislation include: the NCC, American Sheep Industry Assoc., California Citrus Mutual, National Chicken Council, California Poultry Federation, California Grape and Tree Fruit League, California Farm Bureau, National Milk Producers Federation and US Dairy Export Council.
Locke Confirmed as China Ambassador
Lorem By unanimous consent, the Senate confirmed Gary Locke, currently serving as Secretary of Commerce, to be the next US Ambassador to China. Secretary Locke has served as Secretary of Commerce since ’09. He will replace Jon Huntsman Jr. who resigned as Ambassador to China to mount a Republican presidential bid.
In late May, President Obama announced his intention to nominate John Bryson as the next Secretary of Commerce. His nomination is being blocked by a number of Republican Senators until the President submits implementing legislation for the Colombia, Korea and Panama Free Trade Agreements (FTAs). The FTAs have been delayed by a disagreement over extending trade adjustment assistance although there are indications an agreement was reached to take up the FTAs and Trade Adjustment Assistance (TAA) program in September.
In his nomination hearing before the Senate Foreign Relations Committee, Ambassador Locke pledged to continue to press China on trade policies and intellectual property rights.
Jackson Asked to Scale Back Unnecessary Regulation
Reps. Crawford (R-AR) and Fincher (R-TN) sent a letter to EPA Administrator Lisa Jackson, urging her to reconsider a regulation that places an unnecessary burden on farmers and ranchers. More than 100 Congressional Members from across the country signed the letter, which can be viewed at http://crawford.house.gov/UploadedFiles/SPCC_Letter_to_EPA.pdf.
The EPA-mandated Oil Spill Prevention, Control and Countermeasure (SPCC) rule requires that oil storage facilities with a capacity of more than 1,320 gallons must make structural improvements to prevent spills. The plan requires farmers to construct a containment facility, such as a dike or a basin that must retain 110% of the fuel in the container. Such infrastructure improvements would cost farmers tens of thousands of dollars and would cost even more to procure the services of professional engineers.
The letter urges Administrator Jackson to extend the rule's Nov. '11 deadline and requests the EPA do a better job in engaging with the agriculture community.
"This regulation places an unnecessary burden on the agriculture community, diverting resources they could use to expand their operations and create jobs," Rep. Crawford said. "There are no better stewards of the land and water than farmers and ranchers, who derive their livelihood from the earth."
Rep. Fincher stated that, "As a farmer myself, I understand the impact burdensome regulations can have on farmers' and small business owners' ability to invest and operate. The danger with too much government red tape is that it drives up cost and ultimately hurts job creation throughout communities. Following the devastating storms and floods this year, the last thing farmers and small businesses need is an additional bureaucratic hurdle as they struggle to rebuild and recover."
USDA Research Programs Reviewed
The House Agriculture Committee's Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture, chaired by Rep. Johnson (R-IL), conducted a hearing to review USDA's research programs. USDA witnesses included Dr. Edward B. Knipling, administrator, Agricultural Research Service; Dr. Chavonda Jacobs-Young, acting director, National Institute of Food and Agriculture; Dr. Cynthia Clark, administrator, National Agricultural Statistics Service; and Dr. Laurian Unnevehr, acting administrator, Economic Research Service.
Within USDA, the Under Secretary of Research, Education, and Economics (REE) administers research efforts. REE is divided into four main agencies: Agricultural Research Service (ARS), Economic Research Service (ERS), National Agricultural Statistics Service (NASS) and the National Institute of Food and Agriculture (NIFA).
Ranking Member Costa (D-CA) said, "For 150 years, research has been a core mission of the U.S. Department of Agriculture that has helped American farmers thrive. In 2008, for the first time ever, the Farm Bill created the Specialty Crops Research Initiative, which has helped confront the challenges facing America's fruit and vegetable growers in the same cooperative way program crops have enjoyed for over a century. It is critically important that our agricultural research programs remain strong so our land-grant universities and other agriculture schools can continue their important work on behalf of American agriculture."
During the question and answer period, Rep. Costa expressed disappointment that the President's FY12 budget has proposed closing the facility at Shafter, CA, which conducts important cotton research. Rep. Costa indicated that he and Rep. McCarthy (R-CA) are in contact with USDA to request more detailed information about the criteria used in making the recommendation to close the Shafter research facility.
Nine cotton producers from Arizona and California will see cotton operations in Louisiana and Mississippi on Aug. 1-5 as part of the NCC's Producer Information Exchange (PIE) program that is sponsored by Bayer CropScience via a grant to The Cotton Foundation.
The participants include: Arizona – Brandon Brooks, Phoenix; Michael Brooks, Goodyear; and J.L. Echeverria, Paul Hayden, and Chad Odom, all of Buckeye; California -- Kenny Carvalho, Tranquillity; Darryl Mendes, Riverdale; Mark Rosa, Hanford; and Geoff Toledo, Visalia.
The group will begin their tour on Aug. 1 in Louisiana with tours of the Panola Pepper Company and the Louisiana Cotton Museum in Lake Providence and visits to area cotton farms. The next day they will visit the Panola Company, Ltd. cotton operation in Newellton and tour other area cotton farms before being briefed on "The Great Flood of 2011" by the US Army Corps of Engineers in Vicksburg, MS.
The next three days will be spent in Mississippi. On Aug. 3, the group will visit Bayer CropScience's facility in Leland and hear a presentation on "Liberty Link and Weed Resistance" from Gunnison producer Kenneth Hood before getting a tour of the Mississippi River from Delta Wildlife and Delta F.A.R.M. officials. The next day's itinerary in Leland includes an overview of Delta cotton production and of the Delta Council; a tour of the Stoneville Research Complex and the Delta Branch Experiment Station, and individual farm tours in Washington County. The tour concludes on Aug. 5 with visits to Staplcotn Cooperative in Greenwood and Ray Makamson's cotton farm in Itta Bena.
Mid-South producers went to California's San Joaquin Valley in mid-July during the first of four PIE tours this season. Southwest producers will visit Georgia, Alabama and Florida on Aug. 7-12; and Southeast producers will see operations in W. Texas and S. Texas on Aug. 21-26.
Upon completion of this year's four tours, the PIE program will have exposed more than 900 US cotton producers to innovative production practices in regions different than their own.
US Mill Cotton Use Steady
According to the Commerce Dept., June (five-week month) total cotton consumption in domestic mills was 165.1 million pounds for a seasonally adjusted annualized rate of 3.54 million bales (480-lb). Last year's June annualized rate was 3.47 million bales. The May (four-week month) estimate of domestic mill cotton use was raised by 289,000 pounds to 134.1 million pounds. The revised seasonally adjusted annualized rate of consumption for May is 3.53 million bales. The previous year's May annualized rate was 3.55 million bales.
Based on Commerce estimates from Aug. 1, '10-July 2, '11, projected total pounds consumed during crop year '10-11 would be 1.7 billion pounds or 3.64 million bales. USDA's latest estimate of '10-11 crop year mill use is 3.8 million bales.
Commerce will release preliminary July domestic mill cotton use and revised June figures on Aug. 25.
'10-11 Sales, Shipments Lag
Net export sales for the week ending July 21, ’11 were -65,900 bales (480-lb). This brings total ’10-11 sales to approximately 15.1 million bales. Total sales at the same point in the ’09-10 marketing year were approximately 13.9 million bales. Total new crop (’11-12) sales are roughly 6.4 million bales.
Shipments for the week were 141,400 bales, bringing total exports to date to 14.1 million bales, compared with the 11.7 million bales at the comparable point in the ’09-10 marketing year.
With slightly more than a week remaining in the marketing year, weekly shipments must average roughly 417,000 bales to reach the USDA projection of 14.5 million bales.
Effective July 29-Aug. 4, ’11
Adjusted World Price, SLM 11/16
93.51 cents
*
Fine Count Adjustment ('10 Crop)
1.65 cents
Fine Count Adjustment ('11 Crop)
1.70 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
1
Limited Global Import Quota (480-lb bales)
217,208
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
NA
Forward 5 Lowest 3135 CFR Far East
114.02 cents
Coarse Count CFR Far East
NA
Current US CFR Far East
NA
Forward US CFR Far East
117.20 cents
'10-11 Weighted Marketing-Year Average Farm Price
Year-to-Date (Aug.-June)
81.47 cents
**
**August-July average price used in determination of counter-cyclical payment
